Privatization involves transferring ownership of state-owned enterprises to private owners. It was introduced in India in the 1980s due to failures of the socialist economic model and poor performance of public sector units. Privatization led to positive effects like development of organized and unorganized businesses and industries through greater investment, efficiency, and competitiveness. However, the public sector still plays an important role in infrastructure development.

1. Privatization
• Introduction
• Meaning
• Process
• Need
• Effects
• Conclusion

2. Welcome Aboard to the
TIME-MACHINE
Disclaimer :-
• Operated by :-
1. Hardik Bhaavani
2. Sagar Pujara
3. Suresh Dangar
4. Utsav Haldar
5. Hit Alodariya
• Supported and Assisted by = GOOGLE and
MICROSOFT
• Anyone Not Interested to Board it may Adjourn
their Journey NOW itself.
• Every Single Individual in this Classroom has to
Chant the Mantras as and when the Operator
Tells. Ready for the Mantra !

3. HEY GOOGLE ! Take us to the Year 1947.......
Date :- 15th August
DAY OF INDEPENDENCE
Geolocation :- New Delhi, Inside LOK-SABHA
Operator = Hardik Bhaavani

4. Introduction :-
• Agenda :- To Lift the Economy from Poverty
• Proposal :- Rapid Industrial Development with Economic Planning in
Mixed Economy
• Mixed Economy = Public Sector + Private Sector work together for Nation
• Initially > Private Sector = Weak > more emphasis for development of
Public Sector
• HEY GOOGLE ! Fast Forward us
• ERROR MESSAGE :- I AM SORRY BUT YOU NEED A BETTER POWER
SOURCE
• We find certain Weaknesses in Public Sector > Idea of Privatization on
Account of Democracy

5. HEY GOOGLE ! Take us to the Year 1981.......
Date :- 1st January
Scenario :-
• Communist and Socialist Economy began to crumble down.
• Revealed that Economic Development could not be achieved at a faster pace
through this Ideology.
• Communist Economy failed to accomplish Economic Development and raise the
standard of living of the People.
Solution :-
• Rethink about the Performance of PSU owned by the Government.
• Other Developing Countries depended on the Model of Western Economies
(mostly USA).
• We need to catch up with the Trend.
• Idea of Privatization as in USA and other developed capitalistic economies.
Operator = Sagar Pujara & Suresh Dangar

6. Meaning of Privatization :-
• General Sense > Privatization means the
Process of handing over the Public Sector
units to Private Sector unit.
• Barbara Lee and John Nellis explain
Privatization in this way -->
• "Privatization is the general process of
involving the Private Sector in the Ownership
or Operation of a State Owner Enterprise.
Thus, the term refers to Private Purchase of
all or part of a Company. It covers
'Contracting out' and the Privatization of
Management through Management
Contracts, Leases or Franchise arrangement."

7. Process of Privatization :- (i.e., How to undertake
Privatization)
• There are 3 types of measures that can be
executed for the Privatization Process :-
1. Measures related to Ownership
2. Organizational Measures
3. Operational Measures
• Let's Study Each of them (by Proposal Format in
LOK SABHA) :-
Purpose :- To advance the Economy
Agenda :- Take a Final Call after going
through the Proposals
Geolocation :- LOK SABHA, New Delhi, India

8. 1. Measures Related to Ownership :-
I. Total Denationalization (Privatization) :-
• In this, the Public Sector Unit is 100% Denationalized or Privatized.
II. Joint Venture :-
• Limit of Privatization = up to 25% to 50% or more
• Depends on the Policy of the Concerned Government
III. Liquidation :-
• The Assets of the Public Sector units are sold out to Private Sector.
• The Utilization Purpose of Assets can be decided by Private Sector.
IV. Management Buyout :-
• The Purchase of a controlling share in a Company by its Executive
Directors and/or Managers.
• Here, Purchase is made by Public Sector Employee/s who could be
backed by Private Investment from any Group or Bank.

9. 2. Organizational Measures (i.e. deciding the
Government Control over the Privatized Units) :-
I. Holding Company :-
• Government Limits its Powers for Certain High Level
Decisions.
• Provides Autonomy to Holding Company according to
Market Factors.
II. Leasing :-
• Public Sector keeps the Ownership of the Units.
• Management or Operations are leased out to Private
Company for certain period.
III. Restructuring :-
A. Basic Restructuring :-
• Activities regarding Commerce and Trade are
Restructured.
B. Financial Restructuring :-
• Accumulated Losses written off + New Capital
Composition created that suits debt-equity ratio.

10. 3. Operational Measures :-
• These measures are for increasing efficiency of
Industrial Enterprise
• Here, Public Sector Unit Management is given
Professionalism or Commercial Touch
• Necessary changes in operation of the Unit are
made such as more autonomy to employees in
Business Decisions
• Efficiency and Productivity are Boosted up
• Some of the Operational Measures adopted by Public
Sector Units while moving towards privatization are :-
• Change in Management
• Reduction in Government Restrictions
• Allow PSU to resort to Open Market for
Investment

11. Scenario :- Dr. Manmohan Singh, the Finance Minister, talks
about this New Policy
HEY GOOGLE ! Take us to the Year 1991.......
Date :- 24th July
DAY OF Liberalization, Privatization and Globalization (LPG)
Geolocation :- New Delhi, Inside LOK-SABHA
Operator = Sagar Pujara & Suresh Dangar

12. Necessity of Privatization in Indian Economy :-
1. Insistence and advice to attain Economic Development
through Privatization :-
• Continuous Deficit in Balance of Trade – Low Exports –
Foreign Currency Reserves were extremely Low –
Western Countries recommend IMF to help India –
USA indirectly and IMF directly compelled India to
adopt Privatization.
2. Failure of Socialist/Communist Economic Systems :-
• Socialistic/Communistic Ideology and Economy failed
to achieve expected Growth rate – Dissatisfaction
towards performance of PSU's – Adopting Privatization
Strategies after looking at Western Economies and
USA.
3. Poor/Unsatisfactory Performance of PSU :-
• PSU Performance remained highly unsatisfactory –
Exceptional PSU made remarkable profits – Overall,
Public Sector Performance remained dismal.

13. Explanations about PSU Performance :-
1. Low returns on Public Sector Investment :-
• PSU should make at least 14% returns annually – In reality,
returns were very low - In comparison to Private Sector, the
returns in Public sector were low – responsible for Fiscal
Deficit – If PSU = not Profitable, Privatize them.
2. The Share of Savings in Public Sector decreased
3. Inadequate use of Productive Capacity
4. Delay in Business Decision Making Process :-
• Due to Bureaucracy and Red-tapism, undue delays in
Decision Making – Performance Hindered – No
Responsibility – Political Interference – High Cost – No Price
Raise – Subsidies – Lead to Revenue and Fiscal Deficit.
5. Wastage of Rare Resources of Production :-
• Production Capacity unutilized – Utter Wastage of Rare
Resources – Cost of Production = High – Profitability =
Lower.
Thus, Privatization was deemed Necessary.

14. HEY GOOGLE ! Take us to the Year 2014.......
Date :- 1st January
Scenario :-
• Government of India has accelerated the Process of Privatization in recent years.
• Government has divested stakes in many PSU's.
• Private Sector has expanded.
• Licensing Systems abolished.
• However, it is not true to say that only Private Sector has lifted up the Economic Growth
Rate.
• The Contributions of Public Sector in construction and incorporation of Infrastructural
Facilities cannot be neglected.
• Therefore, the current economic development has been achieved due to the
contribution of both the Public and Private Sector.
Operator = Utsav Haldar & Hit Alodariya

15. Effects of Privatization (on the development of
Business ) :-
A. Development of Business and Industries in Organized Sector :-
• Organized Sector is a sector that works according to the Laws and Rules
that regulate business and industries and their development.
• Includes Public, Private and Joint Sectors.
• The Official Data relating to these businesses is published by the
Government.
Analysis of Data in Organized Sector Industries :-
1. Factory Sector
2. Manufacturing Sector
3. Capital Goods
4. Consumer Goods
5. Readymade Clothes & Textile
6. Chemicals & Related Products
7. Small Scale Industries
Conclusion = Overall Positive impact of Privatization on Development of
Business.

16. B. Development of Business and Industries in Unorganized Sector
:-
• Unorganized Sector is that which is not regulated by the laws and
rules of the Government.
• Operates free from the regulatory authority of Government.
• No authentic figures available about this sector.
• Includes Retail Traders, Hawkers, Artisans and many
others who do not have any specific line of trade. Their Economic
Activities are scattered and often unidentified or unidentifiable.
• Their Activities have proliferated due to Privatization.
• If credit is made available to them at liberal terms, they can very
easily make development.
• In Urban and Semi-Urban Areas, the effective demand has gone
up and Production, Employment and Income have also increased.
• Demand for various goods like – TV Sets, Computer,
Refrigerators, Mobile Phones, Furniture, Fashion Accessories, etc.
- has increased substantially.
• Infrastructure facilities have also increased.
Conclusion = Overall Positive impact of Privatization on Development
of Unorganized Businesses.

17. HEY GOOGLE ! Take us to the Year 2020.......
Date :- 02nd January
Day of Economics Presentation
Geolocation :- Inside Class No. 113, @Christ College, Rajkot
Operator = Hardik Bhaavani

18. Conclusion :-
• In India, Private Sector Proved Better and
more Profitable than Public Sector.
• Although, the contribution of Public Sector
Units in the development of Infrastructure
facilities around the Nation cannot be
neglected for the initial stages of
development of the economy.
• Even though Privatization is necessary, it
cannot be denied that even today in
certain areas like irrigation, electricity, road-
building, socially useful services like health,
etc. Public Sector plays a very important role.
• As per Current Trends and Analysis,
Privatization has always helped in achieving a
better economic development growth rate
for the Nation.